Concerns over E.ON’s new energy sales standards

Energy supplier E.ON is getting involved in a business that is of “no concern” to them as a supplier, according to a trade association.

The comment was made as the power provider announced its ‘Third Party Intermediary (TPI) Code of Practice’, which is a set of industry standards for energy sales in the UK. TPIs act as energy brokers or consultants on behalf of commercial users.

The Utilities Intermediary Association (UIA) said it is not convinced about E.ON’s new standards.

Gillian Walton, Communications Director at the UIA said: “TPIs are being forced to sign E.ON’s code which is not really a code but an extension of their TPI agreement which lays conditions on TPIs that fall outside the relevance of the role that involves them with E.ON. However, E.ON are involving themselves in potentially commercially sensitive areas of a TPIs business that is of no concern to them as a supplier!”

In response, a spokesperson for E.ON told ELN: “No one will be forced to sign the code… They have their own code but E.ON’s are much bigger…They (UIA) want people to sign up to their code.

“We work with 170 TPIs in the industry and 115 of them have already signed up to our code of practice. They like the entire concept and they are comfortable with the code.”

Referring to Ofgem’s proposals last year for standards to improve supplier behaviour and add protection for businesses and energy brokers, Ms Walton added: “One also has to ask the question as to why E.ON are going ahead in advance of Ofgem’s announcement on decisions they reach regarding TPI Codes of Practice. It seems that E.ON are determined to usurp even their own industry regulator in their endeavours to control the TPI market.”

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15 thoughts on “Concerns over E.ON’s new energy sales standards”

My concerns relate to the fact that the UIA have a bullet proof CoP which has been running for several years and which is fundamentally, independent of any suppliers (Cost Centre Services is a full member). While I accept it is in the interests of the industry that all Tpis are signed up to a CoP I think Eon is being premature in moving before Ofgem’s proposals to raise standards.

The key here is that what are other energy suppliers planning? Will the action by Eon cause confusion in the market, by forcing Tpis to sign to their code, which in turn will force other energy suppliers to develop their own CoP? I cannot see other suppliers implementing / using a competitor’s CoP, so the result will either be, multiple CoPs, or just a few, operated by a some of the energy suppliers. Ultimately, I assume, a different set of rules will apply for each supply contract signed through a Tpi. Is that really helpful to the industry)? I don’t think so. See the UIA CoP at: https://www.uia.org.uk/code_of_practice.htm.

It is my view that this so called code of practice is nothing more than the latest Eon attempt to manipulate the market to their advantage and keep the regulator off their backs. It is flawed in so many ways and there are so many questions that EoN need to answer but for the most part refuse to meaningfully discuss.

Why has EoN suddenly decided to become involved in a CoP when, I understand, it has previously stated that it was not interested in policing the market, after being made aware of some dodgy practices by a broker from whom it had taken a considerable amount of business?

It is not truly independent and cannot be seen to be so: For example, who pays Duncan Sedgewick’s (the ‘Code Manager’) wages and that of the auditing staff?

The UIA, who’s GENUINELY independent CoP has been in existence for 6 years has been open to discussion with all suppliers but EoN has consistently refused to do so, until now; when they consider their so called CoP a fait accompli?

Why did EoN state that their code was approved by OFGEM when it was not? Is the TPI Manager really that miss-informed? Is that level of attention to detail part of EoN’s idea of helping to “Improve the overall customer experience?”

EoN state above that no TPI will be forced to sign up to their so called CoP. However, their revised TPI agreement states that the TPI will comply with their so called CoP and furthermore the covering emails state that any broker placing business with them after the 31st July 2012 will be deemed to have signed the agreement. This could put a broker in conflict with the GENUINE CoP that he has also signed. Why will EoN not also accept a GENUINE, well established CoP? What is their agenda?

I would also strongly urge all brokers and consultants to carefully study all the Eon documentation relating to this code and consider what their liabilities are if they sign up and how many of these liabilities should properly and professionally be exclusively EoN’s.

Market power is a fact of life – but surely there comes a point where it is being abused!

If customers were happy to be dictated to by suppliers, they would not choose to appoint brokers to represent them. So signing up to a code that is managed by an Eon appointee seems somewhat misguided, to say the least.

Perhaps these brokers are more interested in an easy life than representing their clients?

So, we have a situation where “members” of the E.ON code have been press ganged into joining, and the “Independent Code Manager” has been appointed and paid for by E.ON. How can this code be truly representative and independent?
Everything E.ON wish to attain is already in existence with the UIA code. https://www.uia.org.uk/code_of_practice.htm

Until such time as all TPIs are mandated to provide a statement of the cost of TPI services, expressed as meter point costs or as % of spend or as cost per/kWh, a code of practice does not provide robust assurance to the business consumer.

This should include full disclosure of any fees/commissions/volume rebates or other financial benefits paid to the TPI by its appointed suppliers collected directly or indirectly and additionally the customer has the right to receive an annual statement from the suppliers disclosing any fees/commissions/volume rebates paid to the TPI on behalf of their contracts.

This is an interesting debate and one that has certainly rattled a few cages. I am surprised somewhat by the ferocity of objection by the UIA and its members. if the UIA’s motives were truly to enhance the reputation of the TPI sector and give confidence to those who seek to use TPI services, as per their mission statement. Why is it that they are not working with Eon to assist them with their COP? Irrelevant of execution or even the motive of EOn’s code, surely any level of increased scrutiny/standards of the TPI sector to improve the customer experience should be welcomed from a body also driven to achieve this. Two codes evolving from each other and battling for membership fees might not be a bad thing, or is this the problem…? I guess ultimately the TPI’s and suppliers will decide which code best suits their purpose (hopefully taking the customer into consideration too) until OFGEM give regulatory direction.

I presume by the uniformity of the comments posted; that the UIA has clearly sent all of it’s members yet another list of request and demands.

Ian, I am far suprised by the reaction of UIA members above. I have been subject to a number of UIA emails recently regarding the E.ON Code of Conduct, inclusive of a number of preposterous demands :

1.Do not sign the Eon agreement
2.Do not give the Eon non-code credibility by discussing it with Eon
3.Under no circumstances allow anyone from Eon to visit your premises to carry out an audit or similar check.

Seriously; by sending such emails to brokerages it implies to me that the organisers are far too controlling and potentially have a hidden agenda.

Can you please leave us alone to make our own decisions!???

These are not the type of people I would like to keep a watchful eye over the market.

The UIA has over the years tried to involve all suppliers but EoN has, in its usual arrogant manner, refused to become involved.

The problem with dual or multiple CoPs is that a TPI can simply change from one to another if he is disciplined, perhaps to one where the rules may not really be enforced if he places considerable business in a particular direction. This is at best the “Impossible to be seen to be independent” scenario.

Your last point is valid. The prevarication of the OFGEM plodders and the fact that they do not understand the basics of the market that they are supposed to be regulating is fundamental to the issue. As a result of their inaction a vacuum has developed and it now being filled in a way that is not beneficial to British industry and commerce or to the maintenance and improvement of TPI standards. It is abundantly clear that this organisation and its current leadership, is not fit for purpose.

Dave,

It is not a list of demands but common sense actions that are being recommended if you want to reduce potential threats to your business and to that of other TPIs who behave with integrity.

Very interesting reading some of these responses and I wonder how many of them are UIA members supporting their cause?

Business Advisory Service has signed the Eon CoP because it recognises the urgent need for change within our sector and the responsibility for that change to be achieved through collective collaboration of suppliers and TPI’s. We believe that with Duncan Sedgwick at the helm this will very quickly move from being “Eon’s CoP” to a fully independent CoP with the customers interest at its core and the standards and behaviours of all TPI’s and the way they work with suppliers becoming accountable.

You also have to ask why we didn’t join the UIA, the reason for that is simple and is probably similar to why 95% of UK brokers also haven’t joined over the last 6 years and that is that they are a trade organisation representing TPI’s and their interests. Their main focus has been representing TPI’s against the Suppliers. A meeting with them is a 2 hour session of how bad the suppliers are and how they should all do things differently to make our lives better. That’s fine for a trade organisation but BAS is looking for better service and business standards that improve our customer experience, after all it is them that we went into business for and pay our bills. As far as standing up to suppliers, well we must stand on our own 2 feet demonstrate why we wish to work together in specific ways.

OFGEM will want to see change and BAS has decided that rather than being forced to join a trade organisation that seeks to protect TPI’s we would rather be part of an Independent customer focussed body were our values and processes as well as all other TPI’s are open to scrutiny. Not only will this improve the customer experience but it is the only way to police out the bad practise which some of you have mentioned in your responses.

You make some valid remarks. I concede your point that multiple codes could enable TPI’s to move from one code to another and as such potentially avoid sanctions or ‘quality control’.

Maybe it would make more sense to employ a code manager to ensure that the codes out in the market reach a minimum level of service provision for all the stake holders involved. The TPI market is diverse in terms of the services provided and operating procedures. A TPI could choose the code that best fits their own business model but will still be expected to reach a minimum level of operating standards agreed across all codes. I personally have no axe to grind with the UIA or any other body, my sole aim is to improve the lot of the customer and the imagine of our industry, and until OFGEM make a firm and decisive move, we as a business community need to discuss ‘how to’ rather than ‘don’t do..’

Howard – How is sending an unwanted mail shot to my brokerage; basically rubbishing the E.ON COP and prompting me to adhere to the above list not demands? I also know of several other agencies that received this so the UIA are attempting to rally support by non-members in such way.

I assume like most brokers UIA Member offer E.ON to clients, it amazes me how their product is clearly good enough you are tarnishing their initiative. Customer protection is the bigger picture here not a silly barrage of camaraderie for the UIA’s self-preservation.

I have had a similar experience to Simon with the UIA hence why its membership figures are that of a pub pool team.

I welcome Duncan Sedgwick; a man qualified to do the job that we all need!

Simon: Yes I am a council member of the UIA and my consultancy was one of the founding members. We joined because we wanted to drive up standards and do something about the disingenuous practices of both some TPIs and some suppliers. This has had a lot of success and attracted a broad spectrum of support from consultants, brokers, many suppliers, end users and ministers.

It is simply untrue to state that the UIA’s main focus has been to represent TPIs against suppliers. Suppliers have been able to join the UIA and a number of straight dealing ones have done so. This has proved a very useful forum for both parties to understand each other’s issues and to find ways to resolve any conflict before it arises, whilst always maintaining values and standards and protecting the clients’ interests.

“Stand on our own two feet and demonstrate why we wish to work together (with suppliers) in specific ways.” We all do and will all continue to do so with those suppliers demonstrating integrity.

“Forced to join a trade organisation”, “Rather be part of an independent customer focused body”, “Customer interests at its core” much of your posting is pure fantasy.

Dave: Of course I will offer EoN’s products to my clients if they best suit the client’s needs. If EoN offers the lowest price and this is the client’s main driver, it is my professional duty to do so. Similarly, if the client wanted good, honest customer service and EoN were to provide this I would again recommend them.

Dave & Simon: I do not for one moment doubt the knowledge, ability, competence or integrity of Duncan Sedgewick. However, even a brief look at his C.V. shows that he has “Energy Supplier” written through him like a stick of Blackpool rock. His C.V. further shows that he was instrumental in setting up the ERA. A pure trade body with a track record of blatantly promoting the energy suppliers interest regardless of anything else.

Therefore:

1 Can this person seen to be independent?

2 Is a person seen to be so firmly in the suppliers’ camp the best person to understand and empathise with TPIs and business customers?

3 Dave: Why do you consider a TPI trade body such a bad thing? It is a welcome and constructive counter balance to the exceedingly well resourced suppliers’ trade body. I put it to you that your position on this is irrational!

Ian: If we end up with multiple CoPs and pseudo CoPs, I agree that your suggestion would be the best way forward. I certainly support your aim to improve the lot of the customer and the image of our industry. But why do the dodgy brokers exist and prosper? One of the main reasons is because certain suppliers are prepared to take a lot of business from them without asking too many questions and ignore evidence of wrong doing when it is placed before them. Will a supplier sponsored CoP address that and in reality enforce improved behavour – I very much doubt it. Your point about Ofgem is also valid. I implore you to encourage them to “Pull their finger out.”

“How to?” Continue to demonstrate the highest levels of honesty and integrity towards our clients, each other and the suppliers, regardless of what others do!

Howard, I fully agree with your motives for joining the UIA and your desire to see the industry enforce standards to exclude the minority that unfairly bring this sector a bad reputation.

I do also concede that the Eon Code will not last as long as it is an Eon code. It is vital that Duncan gets on board as many suppliers and TPI’s as soon as possible in order to make it a truly independent code. After meeting with Duncan recently it is evident that this is also his top priority.

I do have 2 questions though; The first is that if we are all shooting for the same target why has the UIA decided to email all the brokers in the way that they have and also contact Geoff at ELN to knock down Eon’s attempt? I believe Ian made the point earlier that working with Duncan is surely a more constructive way to achieve our common goals. The second question I have is that the UIA is very strong in its opinion that we should not let any of Eon’s people through our door, so then, why should I let any of the UIA people through my door when the board members are clearly my competitors that may or may not want to see my business doing well and representing customers in accordance with best business practise?

Simon: I will answer your first question with two other questions. Why has EoN suddenly decided to pursue this course, pre-empting Ofgems decision? Surely it would be more sensible to await the outcome of Ofgem’s deliberations as it is likely that there will be changes required to any CoP (genuine or pseudo) when they have reached their conclusions. That begs a further question; what is EoN’s real agenda? That in turns questions whether or not EoN’s and our goals are common. Much more consideration is needed and EoN’s imposed deadline on TPIs is not conducive to that.

Secondly, UIA do not want to come through your door. However, EoN’s agreement associated with this so called CoP allows them to literally come through your door! I hope you read it carefully before signing. Where are the formalised safeguards protecting your client base if they decide to “audit” you? Also what of the Data Protection act which, of course, they love to quote when it suits their purpose.

I would very much like to work in harmony with everyone in this industry but I do not believe this the vehicle to do this